Barroso outlines EU vision

European Commission President Jose Manuel Barroso sets out his vision for the EU's future Wednesday just as a key German court rules on the legality of a new euro rescue mechanism he has championed. Germany's top constitutional court will announce at 0800 GMT Wednesday whether the 500-billion-euro European Stability Mechanism (ESM) bailout fund and a related European fiscal pact can be signed into German law. The court is widely expected to find in favour but a contrary ruling, or even one hedged with very extensive caveats, could dent hopes for implementing two key measures agreed to help tame the eurozone debt crisis. Barroso makes his "state of the union" address to the EU parliament at 0700 GMT, widely expected to focus on steps towards a stronger political union to match the closer economic integration needed to bolster the bloc. At the same time, the president is expected to detail plans for a banking union -- a new supervision system for the banks which could see the European Central Bank gain unprecedented powers of oversight and regulation. Barroso has said he will unveil the details on Wednesday, noting recently that "the eurozone's new banking-supervision mechanism will have the ECB at its heart." Germany, Europe's powerhouse economy, has reservations, wanting a more cautious approach focused on the biggest banks while Britain is suspicious of any move that could undercut the role of the City of London financial centre. A draft document last week suggested the ECB will have, among other things, the authority to carry out spot checks and withdraw bank licences if deemed necessary, a step previously the preserve of national supervisors. The ECB would take up its new duties as of July 1, 2013, and after a transitional period, take sole authority on January 1, 2014. In comments over the weekend, Barroso pressed the case for ever closer political and economic union, saying he sometimes had the impression that EU member states did not share the same vision of the future. European citizens had lost confidence in the EU project -- buffeted by recession and soaring unemployment -- and there had to be a political response to restore faith, he said. The coming months could be decisive in getting Europe back on track, he said, adding that it was time to take bolder steps forward. Barroso's address will also come as the Netherlands votes in an election where the EU's future direction has been a key issue, with many Dutch resentful at having to help out what they see to be eurozone states who have flouted the bloc's fiscal rules to run up massive debt.